• Revenue up slightly based on the strength of storage and FTTH chips
• Headcount down from 1182 to 1057 with a corresponding reduction in opex.
• “Market Conditions Improving,” with Video being cited as the big driver. I still would like to see someone somewhere step up to the plate and quantify this effect. Without data, this is another “internet traffic doubling every nine months” type of proclamation.
• Expected continued market improvement through the end of the year.
• Lots of storage design wins in SAS (Serial Attached SCSI), though it is still less than 10% of their storage business. Storage featured prominently in the “Design Win Parade” that characterizes investor calls for component companies (they never tell you what they lost).
• China is biggest area of strength, particularly in Metro Optical and Wireless Infrastructure. “Chinese OEMs are driving telecom growth.”
• FTTH revenue up in China and Korea. NTT committed to 3.2M ONU installs in Japan in the year ending March 08.
• More R&D directed at GPON. Bigger focus going forward. They think world will be 60%/40% GEPON/GPON, while rest of world thinks 40/60. I agree with PMC.
• Some odd Q&A about Cable companies using PON. This is something I uncovered months back (see “PON Moves Towards the Enterprise“), but it is the first mention I’ve heard in a public forum from a public company. CEO Bailey backtracked a bit, but it sounds like the cat is getting out of the bag. I’ve heard all kinds of stories about cable deploying fiber - I think the only conclusion one can reach at this point is they are going to do something beyond coax.
• Outlook is $112-$115M next quarter, up from $108.9 this Q. No mention what the deferred component will be next Q. I am assuming $112-$115 includes deferred revenue, which they don’t report on the formal P&L. This Pro Forma accounting is out of hand and the P&L is tough to digest. The key metric: Net Cash is up about $25M in the last six months.
Market liked the call. What did you think?
PMCS 1-yr chart:
Disclosure: Author owns no position in PMCS.